B2B e-commerce firm OfBusiness raises Rs 75 Cr led by Zodius

OfBusiness started operations in January and has expanded its operations to five states or 10 clusters, focusing on the manufacturing and construction sectors.Madhav Chanchani | ET Bureau | December 13, 2016, 06:27 IST

The deal takes the total capital raised by the 18-month-old venture to Rs 110 crore, as it looks to build a marketplace catering to small and medium enterprises (SMEs).

OfBusiness started operations in January and has expanded its operations to five states or 10 clusters, focusing on the manufacturing and construction sectors.

The Gurgaon-based startup has been founded by Asish Mohapatra, a former director at Matrix; Bhuvan Gupta, ex-vice president of engineering at Snapdeal; and former McKinsey partner Ruchi Kalra.

OfBusiness said it has been able to achieve profitability at net contribution margin positive level by focusing on specific clusters, rather than focusing on building a pan-India presence.

It is present in Tamil Nadu, Andhra Pradesh, National Capital Region, Maharashtra and Odisha with plans to expand to five more states, taking its presence to 30 clusters. The startup is looking to quickly catch up with rivals like Power2SME, which was founded in 2012 and had a turnover of Rs 350 crore in FY16.

“Rather than a wide presence we have focused on 10 clusters. Both construction and manufacturing are big sectors, and we wanted to go deep into geographies we are in,“ said Mohapatra, who also leads sales for the startup. “We are focusing more on profitability, better working capital management, higher transaction sizes and focusing more on value from already acquired customers,“ he added. OfBusiness said that it has served over 700 customers, with a repeat rate of over 60%.

Going forward the company plans to set up a non-banking finance company (NBFC) subsidiary with Kalra in charge, which will map customer data, specific products for SMEs and also lend to them. Currently, OfBusiness has tied up with other NBFCs through which it provides loans to its customers.

The deal underlines the growing attractiveness of the B2B e-commerce segment, where other companies like India MART and Udaan have also raised capital this year. Global majors including Amazon and Alibaba have also invested in their B2B commerce operations in India this year.

“We have been scoping for an investment in this space for one-and-half years. We wanted to invest in a company which is a high-touch model, where we found OfBusiness' cluster model very interesting,“ said Gautam Patel, MD at Zodius which has backed consumer facing vertical e-tailers like Bigbasket, Zivame and Pepperfry. “Companies also have to serve two major requirements of merchants -an avenue for credit, and some professionalism in terms of on time delivery to the merchant, which we believe is their differentiator.“